Pa. Legislature's analysts see benefit in Medicaid

HARRISBURG — An expansion of Medicaid eligibility under a 2010 landmark federal health care law would boost the state’s finances by hundreds of millions of dollars a year, the Pennsylvania Legislature’s nonpartisan fiscal analysts said Tuesday.

The report echoes the conclusions of previous studies sponsored by health care groups that support a Medicaid expansion. It also undercuts one of the primary concerns of Gov. Tom Corbett, a Republican who has said he is not ready to support a Medicaid expansion for fear of the cost to Pennsylvania taxpayers.

The report was requested by Senate Democrats, whose leadership supports a Medicaid expansion. It was produced by the Independent Fiscal Office, whose creation in 2011 was spearheaded by Senate Republicans.

Advertisement

Boosting the eligibility limits of Medicaid also would mean health insurance for hundreds of thousands of Pennsylvanians who are uninsured.

Corbett’s top officials in charge of the Medicaid program said Tuesday that they had just begun looking at the fiscal office’s report and were trying to understand how the writers reached their conclusions.

Despite Corbett’s unwillingness to embrace the expansion, his administration has continued to study the matter.

They said they are worried that the federal government may disallow one source of revenue — a state assessment on the Medicaid dollars paid to managed care organizations to cover people who are eligible for Medicaid under the expansion — and significantly cut into a financial benefit from an expansion. That is just one uncertainty that is preventing the Corbett administration from understanding what its options are under a Medicaid expansion and making a final decision on them, top aides to Corbett said.

“We’re working on it every day. We’re asking questions. We talked to the federal government I think three times last week,” said Bev Mackereth, the acting secretary of the Department of Public Welfare. “They don’t have all the answers either, so we’re going to continue to plug away and get as much information as we can.”

The fiscal office’s report said an influx of billions of dollars in federal Medicaid subsidies to cover more people will cut some existing state health care costs and spur higher tax collections from medical providers.

The result would bring hundreds of millions of dollars extra per year into state coffers and an eight-year total of more than $3 billion beginning in 2014, when the federal government would begin sending payments for the Medicaid expansion, the fiscal office’s report said.

That benefit could be overstated by more than $1.5 billion if the federal government curtails Pennsylvania’s ability to collect a managed care assessment under the expansion, Corbett administration officials said.

Besides his concern over the expansion’s cost to taxpayers, Corbett has warned that the federal government cannot necessarily be trusted to follow through on its promises to send money to the states. As attorney general in 2010, Corbett unsuccessfully sued in the federal courts to throw out the law.

So far, the Corbett administration has produced no analysis that looks just at the cost of a Medicaid expansion or that counts any resulting economic benefit. Instead, the administration has estimated an eight-year cost of $4.1 billion, a figure that doesn’t include higher tax collections and counts costs associated with other requirements of the 2010 federal health care law.

Corbett, who is running for re-election next year, is under pressure to go along with a Medicaid expansion. Hospitals executives, top Democratic lawmakers, labor unions, the AARP, religious leaders and advocates for the poor are in favor of it. Meanwhile, several other high-profile Republican governors have embraced it as well.

An expansion appears to have good prospects in the Republican-controlled Legislature, which would need to approve it.